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Jim Cramer's Smart Call

The stock world's biggest celebrity re-ups with TheStreet.com.

Since he climbs out on a stock market limb several times a week, Wall Street rock star Jim Cramer has no shortage or winning and losing calls. However, the new three-year deal he inked this morning with TheStreet.com(Nasdaq: TSCM) may go down as one of his best choices yet.

Come January, Cramer's new deal will find the fiery celebrity forgoing his salary and bonus. He'll still be getting restricted stock units that vest over the next three years, but his pay will largely be based on royalties stemming from his Action Alerts PLUS subscription service. That's a good move all around.

For starters, Cramer doesn't really need TheStreet.com anymore. Sure, he may have founded the company nearly 15 years ago, but between his books and regular CNBC gig, it's not as if he needs to be managing a stock-picking service.

The breakout success of Mad Money on General Electric's (NYSE: GE) majority-owned CNBC has made him a regular on The Colbert Report, The Martha Stewart Show, and any national stage looking for a sharp-mouthed guest who can turn boring market coverage into dynamic television.

However, it also has to be embarrassing for Cramer to see that the company with which he's often associated has been waffling about in the single digits for nearly two years.

It certainly doesn't help that TheStreet.com hasn't posted a quarterly profit in more than two years. Revenue did climb 8% in its latest quarter, so that's encouraging. There's also the $0.025-a-share quarterly dividend. It may not seem like much, but for patient investors, it translates into a respectable 3.7% yield.

Then again, it's not as if TheStreet.com is an anomaly. Value Line(Nasdaq: VALU) is trading closer to its 52-week low than its 52-week high. Morningstar(Nasdaq: MORN) is holding up substantially better, though earnings did slip in its latest quarter.

Forgoing his salary won't necessarily help Cramer turn TheStreet.com into a profitable company. But basing his pay solely on the success of the subscription service he authors and the stock's direction over the next three years sounds like a better recipe for success than what's been cooking at the company over the past couple of years.

ChinaFinance Online is aMotley Fool Rule Breakersrecommendation. Morningstar is aMotley Fool Stock Advisorselection. The Fool owns shares of Morningstar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a fan of Cramer and even read his autobiography a few years ago. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Author

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time with more than 20,000 bylines over those 22 years. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he splits his time living in Miami, Florida and Celebration, Florida.
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